California Transparency in Supply Chains Act 2010

The California Transparency in Supply Chains Act of 2010 has drawn the focus of enterprises towards eliminating human trafficking within their spheres of impact. The law calls for greater supply chain accountability by requiring every retail seller and manufacturer doing business in California and having annual worldwide gross receipts that exceed $100 million to disclose their efforts to eradicate slavery and human trafficking from their direct supply chain for tangible goods offered for sale and thereby contributing to top line and bottom line of the enterprise. Since January 1, 2012, it has been mandatory for the companies to make disclosures available through a “conspicuous and easily understood link to the required information placed on the business’ homepage.” The information must clearly indicate the extent to which a company:

Verifies supply chains to evaluate and address risks of human trafficking and slavery, including if the verification was conducted by a third party;

Conducts unannounced and verified audits of suppliers for trafficking and slavery in supply chains to evaluate compliance with company standards;

Maintains internal accountability standards and procedures for employees or contractors failing to meet company standards regarding slavery and trafficking;

Trains employees and management with direct responsibility for supply chain management, to mitigate risks within the supply chains of products; and

Certifies that materials incorporated into the product comply with the laws regarding human trafficking of the country or countries in which they are doing business.

It is a well known fact that victims of human trafficking often land up working in abysmally poor slavery like conditions for producing goods in the supply chains of retailers that span across the developing countries. It is estimated that the legislation will affect over 3000 companies in California representing roughly 87 percent of the economic activity in the State. The legislation is aimed to re-emphasize and create renewed awareness of slavery and human trafficking issues and generate demand for validation services by companies who are committed to socially responsible purchasing. This disclosure about the efforts undertaken by companies and manufacturers to curtail slavery and human trafficking in their supply chains will facilitate the consumers in making informed choices while purchasing goods. This information would also aid the investors in making jurisprudent decisions while investing in the stocks of the companies upon carefully assessing the reputational risks that confront the enterprises on account of labour law violations in the supply chains.

Appreciating the California Transparency in Supply Chains Act of 2010, Mr. Kailash Satyarthi, Chairperson Global March Against Child Labour said that it can now be hoped that the principal employers, i.e. retailers will take serious cognizance of their responsibility for scrutinizing their supply chains in alleviating aberrations like human trafficking and slavery. “Children being docile are most vulnerable to fall prey to human traffickers who coerce them to work in inhuman conditions in businesses at the cost of their physical, mental and moral wellbeing. Such children remain unskilled, uneducated and inadvertently get drifted in the vicious circle of illiteracy and poverty.” In spite of several Multi-stakeholder initiatives that are operational across the world to deliberate upon poor working conditions prevalent in the global supply chains no radical breakthrough has been still made in instituting decent working conditions thereof.

For a detailed analysis on California Transparency in Supply Chains Act of 2010 prepared by Global March Against Child Labour please click here.